Indian Railway Catering and Tourism Corporation IPO ( IRCTC IPO ) saw strong demand from all sections. The issue closed for subscription on 3rd October. Though IRCTC IPO, the government offloaded 2 crore equity shares corresponding to 12.6% stake, which will bring down its stake to 87.4%.
Post Listing Comments
- IRCTC IPO saw heavy demand and was subscribed about 112 x.
- Few expected a government PSU to deliver 100%+ listing day gains ( the only one till date)
- IRCTC has a strong customer base with Online transactions of more than 25 million per month.
- Increasing internet penetration favors IRCTC e-ticketing platform.
- IRCTC has been allowed to run two trains with freedom to determine the train’s fares. This could add to profit over the coming years.
- IRCTC will not be sharing the convenience fee with the Ministry of Railways.
- IRCTC present tax rate stands at 35% corporate tax which will be down after recent announcements leading to better bottom line.
- IRCTC scrip could have overhang from high Government stake and further issues.
- Despite Government tag, IRCTC is a unique play and could sustain premium valuations.
IRCTC IPO Details
| Issue Period | Monday, Sept 30 – Thu Oct 3, 2019 |
| Issue Size (Shares) | OFS 20,160,000 Equity Shares |
| Issue Size (Rs. Cr) | upto Rs.638 Cr |
| Price Band | Rs.315 -320 |
| Bid Lot | 40 Equity Shares |
| Retail Discount | Rs.10/-per share |
| QIB | 50% of the Net offer |
| NIB | 15% of the Net offer |
| Retail | 35% of Net offer ( 70,00,000 Shares, Rs.217 Cr) |
| BRLMs | IDBI Capital, SBI Capital Markets, Yes Securities |
| Registrar | Alankit Assignments Ltd |
About IRCTC
- IRCTC is a wholly owned subsidiary of the Indian Railways and is a Category 1 Mini-ratna company.
- It is the sole authorized entity to provide catering, online railway tickets and packaged drinking water for Indian Railways.
- Its business is consists of four major segments:
- Internet ticketing (12.4% )
- Catering (52.9%),
- Sale of products including packaged drinking water (11.1%), a
- Travel and tourism (23.5%).
IRCTC : Financials
| Particulars / Rs. Crore | 2019 | 2018 | 2017 |
| Revenue | 1,867.88 | 1,470.46 | 1,535.39 |
| Revenue Growth (%) | 27.03% | -4.23% | – |
| EBITDA | 398.98 | 319.07 | 330.12 |
| EBITDA (%) | 21.36% | 21.70% | 21.50% |
| Profit Before Tax | 429.96 | 345.63 | 355.07 |
| Profit after Tax | 272.6 | 220.62 | 229.08 |
| PAT as % to revenue | 14.59% | 15.00% | 14.92% |
| Equity Share Capital | 160 | 40 | 40 |
| Reserves | 882.84 | 914.53 | 746.56 |
| Net worth | 1,042.84 | 954.53 | 786.56 |
| EPS (Rs.) | 17.04 | 13.79 | 14.32 |
| RoNW (%) | 26.14% | 23.11% | 29.12% |
| NAV(Rs.) | 65.18 | 59.66 | 49.16 |
| Dividend (%) | 76.00% | 222.00% | 212.00% |
IRCTC IPO: Assessment
- IRCTC IPO being 100% OFS will not result in any funds flow into the company. Also the company is sitting on cash surplus of more than Rs. 1,100 crore.
- IRCTC IPO looks attractive and is supported by decent growth outlook
- IRCTC IPO started with GMP of Rs. 120 and commanded GMP of Rs. 200-220 before listing.
- IRCTC IPO is likely to generate a very strong demand from all category of investors.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.